workers freedom

economics as if workers mattered

The Bosses’ State

Pundits are celebrating the first fruits of the post-election bipartisan collaboration, the budget deal that staved off a government shutdown (the government is never actually shut down in these stand-offs, of course; the bombs keep falling, the cages they call prisons are not opened, police brutality continues unabated) for another year. There was some attention to the backroom deal between the White House, Senate Democrats and the Republicans to allow banks to return to the sort of reckless speculation that brought on the financial crisis we are told is now over. (It’s over for the corporations and banks, which are rolling in profits, and they’re the only ones who really count.) It’s a gambler’s dream. If the bets pay off, the banks get to keep the winnings. If they fail, the taxpayers (that is, those of us who must work for a living) have to pick up the tab.

But this was far from the only example of looting. In addition to a raft of tax breaks for the rich, there was a virtually ignored provision that would allow solvent pension plans to slash pension benefits for already retired workers if the plans seem likely to run short of cash in the next 20 years. This is, of course, a real problem. Employers have for decades failed to adequately fund pension plans, relying on rosy projections of robust investment returns to paper over the gap with phone income. When the inevitable fiscal crisis came, instead of coughing up the necessary cash they slashed benefits to future retirees or turned to the federal pension guarantee fund for a bail-out (one always financed on the backs of retirees). The new legislation allows employers to simply “adjust” pension benefits on their own, if the pension trustees (which often include worker “representatives”) agree; but if they don’t agree, the bosses will be allowed to go straight to the federal government for permission.

Los Angeles Times economic columnist Michael Hiltzik was among the few to even notice, and denounce, “the backroom, last-minute congressional deal allowing benefits of millions of retired workers to be shredded.” His conclusion? “It’s even worse than its critics anticipated.” But not for everyone. United Parcel Service stands to save nearly $2 billion from ditching its obligations to a multi-employer pension group it pulled out of in 2007. Workers, meanwhile, could see up to two-thirds of their promised pension benefits vanish into thin air — or more precisely, into the profit side of the bosses’ balance sheets.

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